Lloyd Claycomb is the CEO and Chairman of the Board of United Builders Service, Inc. a specialty contractor. Learn more at http://lloydclaycombceo.com/.

Sep 13, 2016

The Nationwide Construction Worker Shortage

After the United Kingdom’s Brexit announcement, there was a boon in the American real estate market. Foreign investors began to pull their investments from Britain’s real estate market and invest in more stable American property. As a result, more buildings are under construction and more development projects are underway than have been in the past decade. While this is a great turnaround to see, it’s also raising some problems for the industry.

When the housing market collapsed in 2008, an estimated 30% of construction workers nationwide were forced to seek work outside of their field. The housing market collapse rendered already existing houses difficult to sell, reducing — if not eliminating — the need to build new ones and sending construction workers into a panic about finding work. The demand to build new houses just wasn’t there.

Now, eight years later, the problem has reversed. As the construction industry begins to construct new projects, where there was once a surplus of construction workers, there is now a deficit. The National Association of Homebuilders estimates that, in the U.S., there are about 200,000 construction jobs that are currently unfilled — an 81% jump in the past two years. These shortages are industry wide with 69% of firms reporting difficulties in filling their hourly positions, 38% having difficulty in filling salaried positions, 33% having difficulty filling salaried office positions, and 15% reporting difficulty filling hourly office positions. The construction worker shortage doesn’t stop there. There is also a deficit of craft workers, with construction companies also experiencing a difficult time trying to fill electrician, plumber, carpenter, concrete worker, and roofer positions as well.

These shortages aren’t going away any time soon. In the decade from 2014–2024, the United States Department of Labor expects the demand for skilled masonry workers to increase by 15%, the demand for electricians to grow 14%, the demand for roofers to grow by 13%, the demand for plumbers to grow 14%, and the demand for carpenters to grow 6%.

As the labor demand gets stronger, the labor shortage is becoming more and more problematic. With not enough workers to satisfy the need, companies are raising wages and increasing their offered benefits in the hopes of attracting new workers and retaining old ones. Many private companies have reported being forced to give employees raises on the spot to keep from losing them. And as the labor costs rise, so does the cost of building; on average, the construction cost for a single-family home has risen by 13.7% since 2007.

The rising costs of home building is being accentuated by an ever-increasing demand for homes that are newly constructed. However, with the lack of labor, many contractors are hesitant to sign contracts as they may not have the labor force to complete the job within the time requirements which can lead to lawsuits, fines, and hundreds of thousands of dollars lost. This shortage is one that needs to be resolved soon, but likely won’t see a solution for several years to come.